GLOBALIZATION AND MODAL SHIFT IN GOVERNANCE...
Transcript of GLOBALIZATION AND MODAL SHIFT IN GOVERNANCE...
Abstract
Globalization, or the unprecedented geographical expansion of human interaction, also
implies its increased complexity. That, in turn, calls for sophistication in its governance
system. Such need is particularly acute in the governance of developmental activities.
The tenet of this governance is to conduct such activities so that they effectively
contribute to the enhancement of people’s livelihood. However, globalization has provided
people with more instruments and diverse opportunities to improve their livelihood. As
such, even the national strategy for economic development must adapt to this change and
it must provide the conducive institutional environment that encourages people’s initiative
and innovation in making good use of such instruments and opportunities. Obviously, the
centrifugal governance system, found in many Asian nations, is no longer effective, and it
must be replaced with the centripetal governance system that allows the lower echelons
of the governance system to take initiatives and make innovations. Recent efforts by
the governments of Japan and Indonesia, both of which are known to have exclusively
exercised centrifugal governance, to introduce “decentralization” measures in their
governance systems, corroborate the impending need for such modal shift.
1. Globalization, Economic Development, and Societal Evolution
Globalization has been a source of controversy for the last two decades, and this situation
appears to grow in complexity with its geographical expansion. Nevertheless, there is
a broad consensus in one respect; namely, globalization has had significant economic
impact on human society. It has restructured the world economy, reorganized the spatial
profile of production and consumption processes, and accelerated economic growth in
many localities. The rapid rise of BRIC’s nations as such growth centers epitomizes such
changes. However, as the saying goes, “the devil is in the detail,” and a closer look at
GLOBALIZATION AND MODAL SHIFT IN GOVERNANCE FOR DEVELOPMENT
T. Keisei Tanahashi
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the changes reveals serious stresses and strains in the fabric of human society. Indeed,
growing economic disparities within a nation, as well as between nations, has been the
main source of controversy over globalization, as well as societal contentions. Even
the United States, which is widely recognized as the main instigator as well as main
beneficiary of globalization, now faces growing public discontent and demonstrations
against the societal fabric that fosters inequitable wealth distribution.
Economists and policy makers may be pleased to see their nation achieve “economic
growth,” but they may not be fully aware of the societal impact of such growth. While
the term may sound benign and beneficial, it primarily refers to statistical changes in
economy. It makes no reference to the material changes that have induced the growth.
Perhaps for that reason, the term, “economic development,” is used much more widely
than “economic growth” in many nations, and particularly in the developing world.
The word, “development” clearly implies material or physical change. At the same
time, it also implies artificial or man-made change. In other words, the development at
the actual site represents concrete and significant changes in the communal fabric and
life in the locality concerned. For example, a specific developmental effort may refer to
the establishment of a modern industrial factory and operation that has provided many
employment opportunities. While such development may contribute to the locality’s economic
growth, it may also have expropriated or polluted the land and water on which the
livelihood of local communities depended. Economic statistics are unlikely to reflect such
societal impact. Furthermore, such societal impact affects everybody, while the economic
benefit is likely to be shared by a relatively small number of people, in the locality.
Globalization is often characterized as the global espousal of free-market economy.
While the true meaning of “free-market economy” may be argued, its impact has
already revealed itself. Essentially the impact features a triad of changes: namely, (a)
enervation of localized economic system and its sustainability, (b) increased mobility
of economic resources, and (c) expanded liberty for capitalistic pursuit, geographically
and institutionally. The implication of these changes to local economy is obvious. For
example, the economic benefit from any particular development is not only likely to be
narrowly shared by the small group of people in the locality, but also with the people
who come from outside to exploit economic resources and opportunities in the locality.
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Therefore, unless the locality exercises proper governance over the developmental
activities in its territory, the sharing of any economic benefit is likely to be uneven, and
in favor of those with economic wherewithal or political clout. The fact that globalization
has aggravated economic disparity within a nation as well as between nations suggests
that such governance has not yet been widely or effectively exercised.
2. Evolving Governance for Development in Asia
Broadly speaking, economic growth of a nation is effected by development of economic
infrastructure and utilization of available economic resources. When a nation aims at
accelerating economic growth, the former is critical and the national government plays the
key role in its development. This practice stems largely from three rationales. Firstly,
infrastructure development often entails mobilization of national resources. Secondly, it
inherently has strong network externality. Thirdly, it increases and improves utilization
of economic resources and, hence, fosters economic growth. However, that is merely a
theory, and to put that theory into practice is no easy task. The successful execution of
such a task certainly entails competence in development management.
In order to manage such two-pronged developmental effort toward economic growth,
a nation normally adopts a centralized governance system and practices centrifugal
governance. As the naming suggests, this style of governance emanates a controlling
force from the central government downwards, with regard to decision-making as well
as resource allocation and appropriation. Indeed, this has been the practice of many
nations in Asia, with each having experienced the stage of nation building or rebuilding
in its recent history. Japan is one of them. Furthermore, Japan’s rapid rise to a global
economic power after its devastation from World War II gave credence to this style of
governance for other Asian national governments to emulate. However, with the advance
of globalization, times are changing, whether a nation espouse or eschew it. Today
Japan no longer serves as a model nation in governance. Instead, Japan has become
an exemplary case of failure in adapting its governance to the change of time, with its
economy stagnating for more than two decades.
What change is taking place in economy? In the last century, industrialization was the
mainstay of economic development, and a nation had largely to look to the material
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resources available within itself for such development. Nowadays, expansion of service
industry has become an integral part of economic growth, and information, finance and
technology have become vital resources for advanced industrialization. The difference in
the inherent nature of vital resources for economic development is worth noting. Material
or physical resources are location-specific. In contrast, the triad of economic resources
for advanced industrialization, mentioned above, is location-free. In other words, these
resources can be transported anywhere, with little cost or loss of time. Furthermore,
globalization has led to democratization of access to these resources. This engenders
a new strategy for economic development, and that is to design and operate the best
combination of location-specific resources and location-free resources to expand industrial
output and to effect economic development.
Such a strategy must also be equipped to deal with another aspect of globalization,
which is globalized market and competition. This implies that industrial operation and
production should aim at the global market, and that the product must be competitive in
that market. Not surprisingly, the issue of market competitiveness has been a popular
topic of business management in recent decades, and various theories have been offered.
However, from a locality’s point of view, the issue is the same, and that is to design and
operate the best combination of location-specific resources and location-free resources.
Since the latter is equally available to other localities, it is more critical for the locality
to execute the strategy that enhances and excels in the utilization of locally available
resources. Furthermore, nation being an aggregation of such localities, this new strategy
should equally apply to the nation as a whole.
The above discussion thus implies the paradigm shift in national development strategy,
and the shift may be termed “from nationalism to glocalism.” In this context, nationalism
represents the strategy of which the tenet is nation-building or enhancement of
nationhood. In contrast, glocalism, represents the strategy that promotes developmental
efforts which not only make use of the globalized economic environment, but also
effectively contribute to people’s livelihood at the locality or community level. Naturally,
the implementation of this new developmental strategy calls for pertinent adjustment in
the system of governance as well. What is required for the new developmental strategy
is the modal shift in governance; namely, from centrifugal governance to centripetal
governance. This style of governance features, not only the increased autonomy of the
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local authorities in governance, but also the increased flexibility of the central or higher
authority of governance in providing support and facilities for localized developmental
efforts.
Figure 1, below, illustrates these evolutionary changes in societal fabric that globalization
engenders.
3. Modal Shift from Centrifugal Governance to Centripetal Governance
In the centrifugal governance system, developmental efforts are designed by the central
agency and the local agency is expected to implement appropriate activities towards the
designated and localized developmental goal, which forms an integral part of national
developmental strategy and goal. The local agency has little room for exercising its
initiatives in such effort, because of the resource control and constraints that the central
agency has imposed. In contrast, the centripetal governance system features increased
autonomy of the local agency in management of developmental efforts for the locality.
The keyword for this management is flexible coalescence. Societal congruity is essential
for the viability of society or nation. It is fostered by the presence of effective facilities
Figure 1: A schematic presentation of the evolutionary change of societal fabric by globalization
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and control mechanisms for productive human interaction within the society. Although
these facilities and control mechanisms stipulate certain norms for interaction, individual
members of the society still have considerable liberty in pursuance of their livelihood.
Such flexibility and freedom of action or interaction allow individual members of a society
to exercise their talents and ingenuity for enhancement of their livelihood and, thus, they
collectively contribute to the dynamism and viability of society. In short, centripetal
governance system essentially aims at fostering such dynamism and innovative culture
among the actors and stakeholders in developmental efforts.
In this system, the hierarchical structure of governance system remains the same, but
the functional relationships between the agencies at different hierarchical levels will
be significantly different. The central or higher-level agency will essentially perform
two functions. One is the formulation of developmental directions and goals, and the
other is the provision of resources and technical support for those developmental efforts
by the local or lower-level agency. Thus, the local or lower-level agency can exercise
considerable autonomy in setting its priorities and designing the developmental future
for the locality, while ensuring the compatibility between their developmental priorities
and design and the nation’s developmental directions and goals. The higher-level agency
may exercise its supervisory role in ensuring the compatibility, but it should refrain from
Figure 2: A schematic illustration of the modal shift in development governance
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stipulating priority or design for developmental efforts of the local or lower-level agency.
The contrasting governance style between centrifugal governance and centripetal
governance, and the modal shift from the former to the latter are illustrated in Figure 2.
4. Challenges in the Modal Shift
Of course, the modal shift is easier said than done. It faces political and technical
challenges. The political challenge stems from the bureaucracy that is accustomed to
the power and privilege of centrifugal governance. The technical challenge is the lack of
expertise and experience in governance for development at the local government level.
Such governance entails effective promotion, control and coordination of developmental
changes along the designed developmental goal or milestones. However, this again
poses both technical and political challenges; namely, the technical challenge for the local
government to engage relevant expertise for designing such developmental future, and
the political challenge to muster public consensus for such a future.
The critical issue in the modal shift is the capacity building at the local government level,
which is often steeped in centrifugal governance. Therefore, the capacity building must
be a two-pronged effort. One is to enhance the research capability for designing the
future of local society, and the other is to enrich the experience in centripetal governance.
However, research is rarely emphasized in any government. This is no surprise, because
scientific knowledge and findings tend to constrain political liberty. As such, the modal
shift cannot help but face political challenge and technical challenge at the locality level as
well.
The political challenge is the enhancement of democratic process for designing the
locality’s future and the developmental program towards such future. The democratic
process is important, above all, for two reasons. One reason is the sharing of information
and understanding of the locality’s potential and prospect, as well as constraints, for
development, among the people concerned. This process is not just to improve the
transparency of political decision-making, but also the quality of debate on developmental
issues. The other reason is the enhanced consensus on, and cooperation in, actual
developmental efforts by the communities and people concerned. Such consensus and
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cooperation naturally increase the ownership mentality of the people towards the efforts
and their outcome, and that in turn enhances the utility and utilization of developmental
changes.
The technical challenge is essentially to conduct credible research that helps those
communities or people whose livelihood will be affected by the developmental effort
concerned. In other words, credible research is called for production or provision of the
pertinent information that leads to rational and objective assesnent of the locality’s developmental
potential and prospect, as well as constraints, for its viable future. Furthermore, such
developmental efforts and their implementation must be able to receive, at least,
acquiescence, and hopefully material support from the higher-level or other governing
institutions that have stakes in the development at issue. As such, the credibility
demanded of such research is inevitably high. However, it is not easy for the locality to
have or find appropriate institutional support for conducting such demanding research.
After all, the need for such research has rarely arisen in centrifugal governance system.
Under such circumstances, one prospective approach is the formation of partnership
between the locality and some scientific institution that has interest in development
management. Such partnership will reciprocally provide the institution with valuable
opportunities to gain experience and to enhance its capabilities in systems approach
and multi-disciplinary research, both of which are essential for competent development
management.
5. Chances for the Modal Shift
The modal shift is unlikely to happen naturally in the environment where centrifugal
governance is a norm. Opportunities for centripetal governance arise when central
government finds it difficult to apply normal centrifugal practice, because of difficulty
in fully grasping the unique or dynamic conditions that pertain to local development or
restorative effort. Such circumstance arises if and when a particular locality has been hit
by a calamitous event, such as earthquake, tsunami or volcanic eruption. Any calamitous
event entails immediate and large-scale relief or restorative operation. Furthermore, such
operation must be able to deal with extraordinary conditions and needs, which are unique
to the locality concerned, and are likely to constantly evolve as the operation progresses.
This clearly suggests that initiatives and active participation of local people are essential
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for such operation. Therefore, centripetal governance, in which the governing agencies
at the locality level take the lead in its organization and operation, is the only practical
approach.
The other opportunity is tourism development. Tourism is a growing industry
worldwide, and many nations list its development high on their national economic agenda.
Accordingly, individual localities and tourism operators face keen market competition
of global scale. Therefore, any locality that aims at viable tourism development must
make creative or innovative use of cultural or natural properties available in the locality
as the vital resources for such development. However, few local communities have the
skill or experience for effecting such innovation. Thus, many communities are tempted
to emulate some tourism development of the past. Such temptation must be checked by
the consideration for viability or sustainability of the development scheme at issue. For
example, it is politically very tempting to attract significant investment from outside and
to realize significant facility development for tourism. Such approach may generate a
large in-flow of tourists for a while, but that kind of success is rarely sustainable. After
all, the higher the stake, the higher the risk involved in any business venture.
In large-scale tourism development, such risk is twofold. One risk is the difficulty of
retaining the attractiveness of the natural or cultural resources on which the local tourism
depends. The risk of overexploiting such resources is constant, if the development
depends on investment from outside, because it tends to aim at maximum return to such
investment. Even if the investment relies on local sources, there is always the risk that
results in “the tragedy of the commons.” Besides the risk of degradation in resources
and environment for local tourism, there exists the risk of fluctuation in the number
of in-coming tourists. Such fluctuation may be seasonal, or it can be due to change of
fashion in tourism. Whatever the cause may be, it inevitably leads to low utilization and
productivity of local tourism facilities on average, and that implies the loss of economic
viability.
The better approach is to exercise centripetal governance, and to call on the support of
the central or higher-echelon agencies. Tourism development has been recognized as a
prospective approach to ameliorate the growing enervation of peripheral areas and their
economies. If the regional or national agencies concerned can appreciate such prospects,
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they will acknowledge the partnership with those localities interested in tourism
development as an integral part of their own developmental efforts. Then, their support
to local initiatives and innovation will become much more active and effective.
The involvement of higher-echelon agencies is essential for another reason as well.
Discerning tourists who are interested in cultural events and experience need easy access
to their destinations of choice. In this regard, facility development for communication
and transportation is essential. As these facilities have strong and positive network
externality, their developmental effort must come from appropriate higher-echelon
agencies. Thus, centripetal governance works and contributes to national economic
development.
There exists another opportunity for the modal shift in governance, and this opportunity
is engendered by globalization on the one hand and, on the other, inherent nature of
conservatism in governance. The latter usually stems from the polity that has fostered
bureaucracy and promoted such regulations that acquiesce to vested business interests.
Such politics and practice have often grown in the age of nation-building or rebuilding,
and been supported by centrifugal governance system. However, globalization and the
attending globalized economic system have made this governance style and practice
obsolete in recent years. This trend is evidenced by some of those nations that had
achieved notable economic successes in the previous era of nation-building and now suffer
from their well-trenched centrifugal bureaucracy and the resulting economic stagnations.
6. Budding Practice of Centripetal Governance
There is no denying the fact that centrifugal governance system has been the established
norm ever since the emergence of nation-states. The sovereignty of these nation-states
in the governance of national affairs has also been the established norm in international
diplomacy. In fact, they represent two sides of a coin. Globalization has now disturbed
such established foundation of national governance system. It has broadened and
heightened the mobility of economic resources, and this change has made it well-nigh
impossible for the national economy to remain viable within the geographical confine
of national borders. Many nations have recognized and started to adapt to this reality.
However, there are considerable variations in politics between nations, resulting in equally
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considerable variations in the skill and success in such adaptation. Japan and Indonesia
have long been the adherents of centrifugal governance system, reflecting the importance
of nation-building in their respective history and politics. However, even these nations
have begun to experiment in centripetal governance. It is worth noting that this modal
shift was prompted by, economic mismanagement and resulting political pressure for
change, as the following explains.
Japan experienced its financial crisis in 1991, when the bubble economy burst by the
collapse of its real estate and stock markets. Ever since, Japanese economy has lost its
vitality, and its stagnant growth has now been dubbed as “the lost two decades.” Its
national government thus initiated a new scheme for economic vitalization, and named
it “special district with structural innovation (SDSI)” in 2002. Its tenet is to encourage
municipal governments and NPO’s in initiating activities that make effective use of
unique local characteristics and resources for enhancement of people’s livelihood in the
area concerned. The SDSI’s feature is the willingness for the central government to
modify existing rules and regulations according to specific needs of the public as well as
private entities that want to initiate innovative activities at their localities. At the same
time, it stipulates that no financial incentives or support is forthcoming from the national
government to such SDSI programs.
This concept or policy acknowledges that the existing centrifugal governance system has
stunted localized initiatives and innovation for improvement of local livelihood. In other
words, the scheme’s hidden agenda is to identify from the experience of various SDSI
efforts some prospective modifications in the existing rules and regulations for nation-
wide application and economic vitalization. The government has received well over one
thousand applications in the last ten years, and some SDSI projects have led to actual
modifications in the national regulations of one kind or another. A similar SDSI scheme
has also been employed in order to promote economic revival of the areas that suffered
from the calamitous earthquake and tsunami of March, 2011.
Indonesia was hit by the so-called Asian financial crisis of 1997. This crisis affected
those Asian nations that relied heavily on foreign investment for their economic growth.
Indonesia was one such nation, and its national government responded to this crisis by
“decentralization” policy. Its tenet is the devolution of governance to the regional and
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district authorities, together with redistribution of national revenues and democratic
election of district heads. This reform was widely regarded well overdue in view of
considerable variations between the regions and their geographical features in the
country. However, since its implementation started in 2001, it has engendered numerous
confusions and conflicts within the overall governance system. This situation may be
largely attributed to the enormity of administrative adjustment and the inadequacy of
transitional plans and procedures on the one hand, and the diversity of geographical
characteristics between the regions and districts.
These issues are most acutely felt in management of communal properties for
development. The ownership of these properties has been a serious bone of contention
between the government and the citizens of Indonesia since the establishment of modern
nationhood in 1949. Indonesia is said to have 300 ethnic groups, each with distinctive
cultural tradition and practice. Furthermore, their communal livelihood has traditionally
been sustained by democratic management of the communally owned land and natural
resources. However, after independence the national government has assumed the
ownership of all such land and natural resources. This contention of ownership was
exemplified by the regional strife in Ache Province, which stems from the national
government’s sanction of large-scale extraction operation of oil and gas resources in the
province, with little regard to the livelihood and welfare of the local people.
It is not difficult to predict that the decentralization is likely to foment similar incidences
of communal strife throughout the country, unless the modal shift in governance for
development is promoted. The key for effective promotion is the revival of traditional
culture and communal governance system that has sustained communal congruity
and managed communal properties. In other words, the integration of such informal
governance system into the formal local governance system holds the key to successful
modal shift and viable development of communities. It is also the key to the nation’s
economic success, as the consolidation of such communal successes. As such, Indonesia
and its government must systematically take up the challenges of the modal shift that
have been elucidated herein.
Although budding practice of centripetal governance looks very different between
Indonesia and Japan, interesting similarities also exist in these nations, with regard to
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major hurdles against the modal shift. They are recapitulated in the following, and the
improvements in the listed problems will serve as useful measures of progress in the
modal shift.
1) Inadequate appreciation of local geographical characteristics and their diversity;
2) Strong legacy of centrifugal governance;
3) Inherent resistance of political elite to yield to scientific knowledge; and
4) Inbuilt sectionalism in governing institutions, which tend to block holistic approach.
Acknowledgement
This paper is the outcome of continued research on globalization and the author’s
presentations at a few conferences that featured the issue of development and governance
in Asia, the last of which was the 6th East Asian Regional Conference on Alternative
Geographies, held in Bangi, Malaysia, in February, 2012. Acknowledgement is due to its
organizing committee, who provided help beyond their normal responsibility and ensured
the author’s participation and presentation.
Some information on “decentralization” policy and practice in Indonesia is provided by
Mr. Deni Sumadio, of Widya Swara College of Economics, and Ms. Nelgus Yefri, of West
Sumatra Regional Government. Thus, their assistance is gratefully acknowledged.
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